SU Depreciation on Organizations Performance Discussion
Description
Does the accounting depreciation method applied to PPE (property??, plant and equipments = Fixed tangible assets) allow companies to grow at a higher rate and therefore create higher economic growth from a macroeconomic point of view?
To answer this question, it is expected that you make the analysis of the 3 scenarios calculation (which I already modeled) in terms of corporate taxes, net profit, and cash variation, discuss your results and make a conclusion.
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The name of our company is Djibson Telecommunications. The company specializes
in selling cellular phones, sim-cards and data packages. In the year ending June 2020, the
company realized a net revenue of 200,000 In terms of Cost of Goods Sold, the company
spent 20,000 Djibson Telecommunications pays salaries for 1,000 !nd an income tax of
30%. Furthermore, the company has fixed assets worth 60,000 and its shareholders receive
50% of the net profit.
In this paper, we are going to analyze the performance of Djibson Telecommunication,
modelling three scenarios. In the first one, no depreciation cost has been recorded (A), and in
the two others, depreciation costs of six (B) and three years (C) period have been calculated.
Moreover, the depreciation method used is the linear/straight depreciation method.
The table below shows the modelisation of the three scenarios calculation of the
company Djibson Telecommunications.
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